Tracy Shaw, Senior Vice President, Corporate Compensation Plans Inc., Danbury

What's the market like right now for long-term care insurance and how is it being impacted with Baby Boomers beginning to reach retirement age?

The market has been flat for the past several years, though now as more and more Baby Boomers are approaching retirement, they are becoming more aware of the the financial and emotional consequences to themselves and their families of paying the costs of long term health care. 

That has resulted in a greater focus on long-term care insurance as an integral part of retirement and financial planning particularly for sole proprietors, partners, and members of limited liability companies, who can deduct a substantial portion of long term care insurance premiums.

Additionally, it's often overlooked that most insurance companies offer a return of premium feature - a refund of total premiums paid less benefits received to the insured's family at his/her death. This means that the maximum cost of the insurance - assuming benefits have never been received - is reduced to the interest that could have been earned on the premiums had they been invested.  

 

How is the recession impacting benefit plans offered by employers?

While we see employers looking to right-size for today's business needs, we also know that those with the greatest talent will be the most successful, making recruitment and retention strategies vital to survival in this economic climate.  The ability of an employer to offer a retirement plan including a safety-net against the impact of a disability, both, pre and post retirement shows an employer's forward thinking to the needs of its people.  Integrating the Retirement Security Plan into their overall benefit strategy - especially at the executive level - will place them at the pinnacle of the list of employers of choice.

 

Your company recently unveiled new retirement security plan for physicians. How does it work and why is needed right now?    

Physicians - like all of us - face two serious threats to their retirement security. The first is that, when they become disabled and cannot practice, contributions to their retirement plans stop causing the potential for serious reductions in their expected retirement income. The second is that the costs of long-term health care, which can exceed a million dollars, can decimate their retirement income because monies designated for retirement living have to be redirected in order to cover the cost of care. The result is the, sometimes premature, liquidation of assets in order to cover the cost of care and maintain their family's standard of living. Compounding these threats, are the strict limitations placed by insurance carriers on the amount of disability income protection physicians can obtain.

To mitigate these threats, the answer is a dual component retirement security insurance program. The first component provides pre-retirement disability protection and will pay up to a million dollars in tax -free insurance benefits.  These benefits can either be invested to offset the lost retirement contributions or, if needed, used to meet current financial obligations.

The second component is long term care insurance providing future protection against the costs of long-term health care. Including LTC insurance protection in your Retirement Security Plan means that accumulated savings and investments are spent as intended -  on retirement, not extended health care. Some, or all, of the premium is tax deductible and the policy can include the premium refund feature, making the coverage affordable.